Difficult decisions made to avoid bankruptcy: the Minister of Oil

ISLAMABAD:

Minister of State for Petroleum, Dr Musadik Malik, said on Friday that the incumbent government had made tough decisions on petrol and diesel subsidies, with a focus on reviving the national economy and the country’s exit from the financial crisis.

Addressing a press conference with the top leader of the Pakistan Muslim League-Nawaz (PML-N) and former Prime Minister Shahid Khaqan Abbasi, Musadik said that the previous PTI government gave unjustified subsidies on petroleum products without any budgetary allocation or approval from the concerned parties like the Economic Coordinating Committee (ECC) and the federal cabinet.

Calling the subsidies a “landmine” installed by the PTI government before facing the no-confidence motion against Imran Khan, he said they imposed an additional burden of around 700-800 billion rupees on the Treasury in three months, if taxes were included.

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Making a comparison, the Minister of State said that about Rs 528 billion of expenditure is incurred every year to run the affairs of the entire Federal Government.

In addition, Dr. Musadik said the previous government also violated commitments made with the International Monetary Fund (IMF) on grants to secure financial assistance.

“The PTI government, as a precondition, had signed a contract with the IMF that it would raise prices and impose an oil tax and a sales tax. But, it violated sovereign engagement with international financial institutions,” he said.

The Minister said that the PTI had done all this to push the country towards default and bankruptcy for political gains, and recalled Imran Khan’s recent statements on the country’s strategic assets and disintegration.

Dr. Musadik said the coalition government under the dynamic leadership of Shehbaz Sharif is committed to taking due care of the poor segments of society by giving them financial aid.

After careful deliberations, he said the government would provide a monthly allowance of Rs2,000 to people with a monthly income of Rs35,000 to Rs40,000 or less. According to the calculation, he said, almost four out of six families have an income of 37,000 rupees per month.

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With the corrective measures taken by the government, the minister expressed confidence that in the coming months there will be financial stability and the country will be on a steady path of progress and development.

Now he said stock markets had started to perform well and the rupee was gaining stability against the dollar.

He said the necessary steps had been taken to advance negotiations with international financial institutions, including the IMF.

He said the government believes in increasing the productivity of industrial units so that more jobs can be created apart from keeping the economic wheel moving at a steady pace.

On the occasion, Shahid Khaqan Abbasi said that no country in the world provides fuel to consumers below purchase price, but in Pakistan it happens because even the current government does not impose any levy or sales tax.

He said the reasons for the increase in fuel prices were global inflation and the devaluation of the rupee against the dollar.

“This [increase in fuel prices] was an extremely difficult decision made after careful consideration. If this measure was not taken, the national economy would have collapsed,” he added.

Abbasi said the grants could not be continued by securing additional loans from international institutions as this could have a hugely negative impact on the economy and unprecedented inflation.

Janet E. Fishburn